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Efficient Contractual Forms and Business Models for Urban Waste Heat Recovery
Urban waste heat recovery investments have special traits. They are long-term investments with a payoff of 15 years or more. This kind of investment requires investors who accept the long pay back and contracts that can account for changes over time, making renegotiation clauses imperative.
The value of the recovered urban waste heat yields a lower margin than heat recovered from industrial processes that hold high temperatures. The small margins make the identification of value very important: both sides must agree on the price of the urban waste heat depending on different seasons and demand.
This ReUseHeat report (2019) identified seven factors which are important to consider when making urban waste heat recovery contract decisions: these are: 1) Low maturity of the installations, 2) Lack of legal framework and incentives, 3) Subjective value of heat, 4) Long payback periods, 5) Asymmetric information, 6) Shared incentives and 7) Termination of the waste heat source.
Depending on the contractual choices made regarding these seven factors the business model can be built accordingly.
Author: ReUseHeat project
Key words: urban waste heat, investments, contracts, business model
- Waste heat
- Business models and financing
Type of Content
- Report / Study